CHAPTER 6- CONTRACTS Flashcards
ART.1305
A contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service.
ELEMENTS OF A CONTRACT
- Essential Elements - without them a contract cannot exist
- Natural Elements - those found in certain contracts and presumed to exist, unless, the contrary has been stipulated
- Accidental Elements - these are the various particular stipulations that may be agreed upon by the contracting parties in a contract.
STAGES OF A CONTRACT
- Preparation (or Conception or “Generacion”)
- Perfection (or birth)
- Consummation (or death or termination)
BASIC PRINCIPLES OR CHARACTERISTICS OF A CONTRACT
- Freedom to stipulate
- Obligatory force and compliance in good faith
- Consensuality
- Mutuality of contracts
- Relativity
- the freedom to decide whether one should enter into a contractual relationship at all and
- the freedom to stipulate upon whatever terms the parties may wish and agree
AUTONOMY
Limitations on the nature of Stipulations
not contrary to law, morals, good customs, public order, or public policy
- Obligations arising from contracts have the force of law between the contracting party and should be complied with in good faith.
OBLIGATORY FORCE AND COMPLIANCE IN GOOD FAITH
CONSENSUALITY
How contracts are perfected
(a) consensual contracts — by mere consent (this is the general rule)
(b) real contracts — perfected by delivery
(c) formal or solemn contracts — here a special form is required for perfection
Note: Consensual contracts are perfected from the moment there is agreement (consent) on the subject matter, and the cause or consideration.
- Both parties are bound. The principle is based on the essential equality of the parties. It is repugnant to bind one party, and yet leave the other free.
MUTUALITY
- A contract can only bind the parties who had entered into it or their successors who have assumed their personality or their juridical position and that, as a consequence such contract can neither favor nor prejudice a third person.
RELATIVITY / PRIVITY OF CONTRACTS
EXCEPTIONS TO PRINCIPLE OF RELATIVITY
(a) Where the obligations arising from the contract are not transmissible by their NATURE, by STIPULATION, or by PROVISION OF LAW.
(b) Where there is a STIPULATION POUR AUTRUI (a stipulation in favor of a third party)
(c) Where a third person induces another to violate his contract.
(d) Where, in some cases, third persons may be adversely affected by a contract where they did not participate.
(e) Where the law authorizes the creditor to sue on a contract entered into by his debtor (“Accion Directa”).
ESSENTIAL REQUISITES OF A CONTRACTS
- Consent of the contracting Parties
- Object certain which is the subject matter of the contract
- Cause of the obligation which is established
Consensual – all three elements
Real Contract – 4th element delivery (pledge, commodatum, deposit)
Solemn/Formal Contract – compliance with formalities of the law
- manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract.
CONSENT
REQUISITES OF CONSENT
- There must be two or more parties
- The parties must be capable or capacitated
- There must be no vitiation
- There must be no conflict between what was expressly declared and what was really intended.
- The intent must be declared properly
- Proposal made by one party to another to enter into a contract.
offer
- The manifestation by the offeree of his assent to the terms of the offer.
acceptance
The OFFER must be certain and the ACCEPTANCE absolute and unqualified. If the acceptance is qualified, let us say by a condition, this merely constitutes a _______________
counter-offer
HOW MUST ACCEPTANCE BE DONE?
- Acceptance may be express or implied. It must also comply with the time, place and manner fixed by the person making the offer, if so fixed.
WHO ARE INCAPACITATED TO GIVE THEIR CONSENT TO A CONTRACT?
- Minors
- Insane or demented persons
- Deaf-mutes who do not know how to write
WHAT ARE THE CAUSES OF VITIATED CONSENT?
- Mistake
- Violence
- Intimidation
- Undue Influence
- Fraud
KINDS OF FRAUD
- Fraud in the CELEBRATION of the contract (this is fraud proper):
1.1. DOLO CAUSANTE (or causal fraud): Here, were it not for the fraud, the other party would not have consented.
1.2. DOLO INCIDENTE (or incidental fraud): Here, even with- out the fraud the parties would have agreed just the same, hence the fraud was only incidental in causing consent - Fraud in the PERFORMANCE of the obligations stipulated in the contract.
- It is the process of intentionally deceiving others by producing the appearance of a contract that really does not exist (absolute simulation) or which is different from the true agreement (relative simulation).
SIMULATION OF CONTRACTS
- The thing, right or service which is the subject matter of the obligation which is created or established.
OBJECT
REQUISITES OF A VALID OBJECT
- Within the commerce of men
- Real or possible
- Licit
- Determinate or at least possible of determination as to its kind
- Essential and impelling reason why a party assumes an obligation.
CAUSE OR CONSIDERATION
EFFECT OF LACK, UNLAWFUL AND FALSE CAUSE ON A CONTRACT
- Contracts without cause or with unlawful cause, produce no effect whatever. The statement of a false cause in contracts shall render them void, if it should not be proved that they were founded upon another cause which is true and lawful.
- It is necessary that the cause must exist, BUT it is not necessary to STATE the cause in the contract.
CAUSE OR CONSIDERATION
